Specialists for a state agency that runs a recovery program for financially distressed communities will start looking for fiscal problems in Greenville within two weeks, according to borough officials.

It could take up to six months for the state Governor's Center for Local Government Services to determine whether the borough is eligible for emergency funding under the Act 47 program, the officials said.

If the borough is eligible for the program and council votes to enter into it, the borough could receive an interest-free loan this year.

The money could lift the borough out of its deepening fiscal hole.

The borough currently has a deficit of about $1.1 million.

Some officials also have estimated there is less than $100,000 in a $3.67 million bond issue for a borough recreation and revitalization project. However, there are problems at the sports complex that must be fixed and the downtown revitalization has not yet started.

Furthermore, the borough has used a quarter of the bond for general spending, including transferring $238,000 from the bond to the general fund in a budgetary move this year. That money must be replaced. Use of the bond money for anything other than the project is unauthorized, according to the bond agreement.

Borough council members, who recently approved a 24-percent tax increase for the year, said they needed to keep the borough afloat until tax dollars started pouring in.

The tax anticipation note usually used for that purpose is being used this year to pay off the tax anticipation note that defaulted last year.

If the borough becomes a distressed community, in addition to receiving interest-free emergency loans it could be eligible for state grants that are not available to fiscally sound towns and free management help. It also would have more taxing power under the law, with an ability to increase local income taxes.

Borough Manager Kenneth S. Weaver said if the borough becomes a distressed community, the objective would be to get out of the program as quickly as possible.

Communities are required to stay in the program for at least three years, he said. Farrell, the first city in the state to be designated a distressed community in 1987, remains distressed today.

Borough council voted last month to ask the state to diagnose the borough's fiscal condition and determine whether it is eligible for the program.